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Dissolving a Corporation or LLC in California

January 28, 2019


The dissolving of a business is a process that is not quick or easy. The termination of an LLC or corporation will require adherence to a procedure that is approved by the principal members and shareholders. Because members participate in the day-to-day operations of smaller businesses, they have interests in the dissolution, as well.


Organizations of a larger size commonly have individuals who are not active in the daily function of the company. They are known as a board of directors and, they too, must approve the dissolution of the business. Afterward, those with a stake in the company take a vote to determine the final decision.


If an amenable conclusion is reached, the corporation must file a formal Certificate of Dissolution with the state of California. To ensure no steps are overlooked and to help with the process, it is beneficial to reference a checklist for closing your business.


If your company has a board and you are a shareholder with 50% interest in the company and you do want the dissolution, but every other party with an interest does not, you can petition the court to dissolve the corporation. The court may rule in your favor if you are able to demonstrate:


  • The organization’s board has conflicting thoughts about how the corporation should be managed, thus getting enough votes to take action is impossible.

  • Members and shareholders disagree to the point that they are not able to accumulate enough votes to elect a board of directors.

  • The dissolution of the business would be advantageous to everyone involved due to the level of dissension among internal shareholders.


An experienced business lawyer in Santa Monica can help you with the process.


If a corporation is registered and licensed to conduct business in multiple states, an Application of Withdrawal, Termination of Registration, or Certificate of Surrender must be completed before it is able to officially close out with the IRS.


Expert Business Attorneys in Santa Monica and Los Angeles


No one sets off on a business venture with the intent of having it close its doors as a result of corporate politics or infighting. However, corporations have many ongoing concerns. The ability to predict what will happen during the business lifespan does not exist. Knowing this, occasionally it is in the best interest of everyone involved if the corporation winds down its operations and dissolves.


If your business is coming to a close, it is mandatory you formally dissolve the corporation so you release yourself from your tax obligation. If you do not go through the proper dissolution procedures, you will be required to pay future taxes and fees to the state of California.


The attorneys at Verhagen Bennett LLP acknowledge the importance of being represented by experienced counsel who are educated in all matters relating to commercial litigation and corporate transactional law. Business law attorneys in Santa Monica and Los Angeles who possess these skill sets will have your best interests in mind as you are interacting with combative shareholders.


Our lawyers will orchestrate the orderly and systematic dissolution of the organization and the relevant assets.


To learn how we can provide premium legal representation for you, schedule a consultation or call (310) 917-1064 today.


(image  courtesy of Matt Botsford) 


For questions or comments about this post, please email us directly at: info@VerhagenBennett.com


© 2018 Verhagen Bennett LLP — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.


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